We just had an offer accepted for a new home a couple of days ago. As such, there's now a flurry of excitement and financial activity going on in our household now, and there will continue to be excitement even after our current house is sold.
Part of this excitement involved taking the first steps to adjust to a new mortgage payment. My wife put down some numbers for what our expenses are currently, added them up, and came to the conclusion that things were going to be really, really tight as far as making ends meet.
This surprised me more than a little bit. The difference in the mortgages between the two houses wasn't gigantic: only a few hundred dollars per month. Were we that close all this time? Did we really spend $1,000 per month on food for our family of three? Are our monthly credit card charges reasonable, extravagant, or at a bare minimum?
If we had been tracking our expenses more carefully over the past year, I wouldn't be doubting the numbers like this. I'm guilty as charged: I still budget by The Force and we've managed to (yet again) squeak by for a few years doing it this way. But I think I had a realization tonight: We can't afford to do this kind of thing anymore.
It's more than just realizing that there's fat in the budget that can be cut. ($1,000 for food was high, by the way.) It's realizing that having a concrete saving and spending plan, and monitoring that plan, is critical. Spending and saving without tracking things is just wandering, and after a while, you just don't know where you stand. Like I just found out.
Being unsure of where you stand financially isn't pleasant. Take some steps to track your spending and saving, as I've started to do (again) with Quicken. I'm going to try my currently-owned version (Quicken 2007 Home and Business) for a while to see if I can get the hang of it. So far it seems easier than the last few times I've tried it. I don't think that's Quicken's fault. I'm letting it do more of the work it was designed to do, like automatically updating transactions in accounts instead of me rolling up my sleeves and entering everything by hand. I'll go through to check them, but it's probably a good compromise to have Quicken do the bulk of the work.
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$1000/month for food. Now I don’t feel so bad. Ours was $1,300 but for a family of five!
Unlike me, most PF bloggers don’t have teenagers and their friends eating everything in the house … yet.
Congratulations on the new home. I know you have been looking for a while. I have no worries-you will get your spending in order.
We all get sloppy from time to time. (I know I have.)Those who are successful with money, realize it and make changes, well before it gets to be a big problem.
Good luck.
mbh…
It shouldn’t be so difficult, should it? But it does make the difference. We’ve been tracking every dollar spent for 18 months (virtually). Still we “misplaced” 6K last year. Tracking just receipts wasn’t enough, we need to take a more detailed approach to every dollar. I hope quicken works for you!
Congrats on the new house! Hopefully it is smaller… (less room to acquire more stuff!)
Ron: $1,000/month was probably high, but the point was we don’t really know. But your point about teenagers is well-taken.
Dr Dean: Sloppy is an accurate word.
LLC: It’s a bit bigger, but my wife already has your mindset about downsizing the junk. My old Commodore 64s won’t be making the move.
I found buying a house to be an amazing — yet extreme — way for my husband and I to figure out exactly what we were spending our money on. Once we started house-shopping, the calculators came out. We’re pretty frugal people, and it’s still tough to make sure we’re living within our means now that we’ve bought a home. Our entire budget had to change in a way that would let us save more money but not make us miserable. It’s all about balance.